Originally published on: November 14, 2024
Bitcoin saw a 4.1% decline on Nov. 14 as US inflation data slightly exceeded expectations, causing a ripple effect in the market. Similar to the S&P 500 index futures, which also experienced a dip, traders are now questioning the correlation between Bitcoin and inflation-hedging attributes.
The US Producer Price Index (PPI) for October showed a 2.4% annual increase, raising questions about the Federal Reserve’s interest rate cut plans. While historically Bitcoin has been a safe haven from inflation concerns, recent government liquidity injections have tempered its effects. Now, with potential corporate earnings pressures looming, traders are on edge.
The new administration’s cost-cutting measures and strategies to strengthen the US dollar could pose short-term challenges for risk assets. Actions like potentially eliminating tax credits or restructuring federal agencies may impact sectors beyond just stocks, potentially affecting Bitcoin along the way.
Bitcoin’s role as an alternative reserve asset faces uncertainty as the US government attempts to limit spending growth. However, the appeal of Bitcoin’s scarcity value, censorship resistance, and transparent nature may still attract investors despite these challenges.
Despite short-term concerns over inflation, Bitcoin’s trajectory toward $100,000 and beyond may hold strong against market pressures. Stay updated on market insights and investment opportunities to refine your trading strategies with our Markets Outlook newsletter.
